With both gold and silver prices on the rise and showing no signs of slowing down, best bets for investors include producers with either better than average sustainable free cash flow, growing reserves and resources, and/or those with growing production, a new note from Scotia Capital suggested Wednesday.
David Christie, analyst with Scotia, expects gold to approach a peak of US$1,500 an ounce and silver near US$25 an ounce by year-end.
“Gold and silver prices are buoyant,” he said in a note to clients.
Gold prices rose 3% in the third quarter compared with the previous quarter, and jumped 28% compared with the third quarter of 2009, while silver prices increased 3.6% quarter-to-quarter and 29% over the third quarter of last year.
“We believe momentum is now in the precious metal camp with talks of further quantitative easing from the U.S. Fed and from other central banks,” Mr. Christie said. “We see no reason right now for gold’s long- to medium-term rise to be halted and expect it to continue to rise, with short-term corrections as it meets technical resistance.”
And with the U.S. dollar continuing to look weak in the face of other currencies, more and more investors will flee to gold as a safe haven.
Here’s some companies that fit the bill for investors in various categories after the jump:
Cash flow or reserve and production: Barrick and Kinross on the large cap side, Iamgold, Centerra and New Gold in the mid-cap, and Troy in the junior group, Volta among emerging producers and Silver Wheaton for silver and royalty groups.
Producers expected to beat consensus forecasts by at least 10%: Northgate, Semafo and Centerra.
Producers expected to miss consensus forecasts by at least 10%: New Gold, Hecla, Goldcorp, Royal Gold, Silver Standard and Yamana.
Read more: http://business.financialpost.com/2010/10/20/gold-to-us1500-silver-to-us25-by-year-end-scotia/#ixzz1302qfBEZ